Summaries under s. 15(2.3) and s. 17(5) - Exempt loan or transfer.
A. Will 17(1) apply to Canco to impute an income inclusion in respect of a loan it makes?
B. Will 17(2) apply to deem an amount be owing to Canco by another person because Canco made a loan to a related non-resident party?
C. Will 15(2) apply to include an amount of a loan into the income of the related non-resident party?
D. Will 15(2) apply to include an amount equal to the deposits and loans in the income of BCo and ACo, or any member of the Parentco Group?
E. Will subsection 80.4(2) apply to deem a borrower to have received a benefit?
F. Will subsection 245(2) apply to redetermine the tax consequences described in Rulings A to E above?
A. Provided the interest rate is equal to or exceeds the amount of interest computed at the rate prescribed by paragraph 4301(c) of the Regulations for the period of the year during which the loan is outstanding, subsection 17(1) will not apply to include an amount in computing Canco's income in respect of a loan made by Canco.
B. 17(2) will not apply since each loan is considered an "exempt loan or transfer" pursuant to subsection 17(15).
C. 15(2) will not apply since the criteria in 15(2.3) are met. Since 15(2) does not apply, paragraph 214(3)(a) and subsection 212(2) do not apply.
D. 15(2) will not apply since the criteria in 15(2.6) are met. Since 15(2) does not apply, paragraph 214(3)(a) and subsection 212(2) do not apply.
E. 80.4(2) will not apply provided the interest for the year on each loan is paid no later than 30 days after the end of the year and the interest charged on each of the loans is at least equal to the prescribed rate of interest. Since 80.4(2) does not apply, subsection 15(9) will not apply to deem there to be a subsection 15(1) benefit, which would via 214(3)(a), trigger withholding under subsection 212(2).
F. The proposed transactions do not result in a misuse or abuse of the provisions of the Income Tax Act.